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Small Claims Court Matters

The small claims division deals with the dispute if the amount in question in no more than $10,000. Persons involved in these matters sometimes represent themselves, or they may choose to retain a solicitor for dispute resolution.

Whether a solicitor is involved or not, the small claim division has certain rules, which are particular to the cases that it hears. The small claims division is designed to facilitate the just, quick and cheap resolution of disputes.

Before starting your personal or civil claim, it’s important to note that:

  • Only amounts up to $10,000 are processed in Small Claims Division of NSW Local Court
  • Claims with higher amounts ($10,001 – $100,000) are dealt with in the General Division of the NSW Local Court
  • Claims above $100,000 are heard in the District Court or the Supreme Court

When to Seek Legal Assistance

Some disputes are quite complicated and need immediate legal action. We strongly recommend that you seek legal advice if your claim is:

  • A home loan
  • A personal loan
  • A credit card dispute from a bank or other financial companies
  • A house or apartment rental
  • A dispute from purchased goods or services

Are you the Lender?

If someone owes you money, you should know the entire process of filing a claim in the court in New South Wales. The normal process comprises of the following:

  1. Sending a letter of demand
  2. Filing a case in court (involves filing fee)
  3. Attending court proceedings
  4. Implementing the court order if the judge decides on your favor

Are you the Debtor?

Does a person or debt recovery agency chase you for money? Typical steps you need to go through include:

  1. Making a response to a letter of demand
  2. Filling up a claim form
  3. Dealing with a Statement of Claim
  4. Attending court proceedings
  5. Taking actions depending on the outcome of the case (including actions you can if you need time to pay or when there is unfair dismissal claim)

If the Defendant (you) defends the claim, the case will automatically be scheduled for a pre-trial review.

Court Judgment

Therefore, matters are conducted with less technicalities and less formality than typical court cases.

Rules that solicitors follow which determine what types of evidence can be considered by a judge do not strictly apply in the Small Claims Division.

Unless the court wishes, witnesses do not give oral testimony. Further, a Pre-Trial Review is often offered by a court official to see if the parties in dispute can reach an agreement. Finally, if you lose your case in the Small Claims Division, the right to have an additional court review the decision, known as an appeal, is limited.

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Debt Recovery Process NSW

A court case is commenced in the Small Claims Division by the plaintiff filing a document known as a Statement of Claim. This court document sets forth the reasons why the plaintiff believes a particular defendant owes the plaintiff money, which has not been paid. A copy of the Statement of Claim will then need to be served on the defendant.

When a defendant is served with a Statement of Claim, the defendant has 28 days from the date of service to respond. There are several options on how to respond such as:

    • The defendant can attempt to negotiate with the plaintiff. Although the plaintiff is not obligated to, the plaintiff can respond and enter into negotiations with the defendant. If both parties reach an agreement, the plaintiff, being the one who started the matter in the first place, must file additional paperwork with the court to stop the case. This is known as a Notice of Discontinuance.
    • The defendant can ask for more information. This is sometimes referred to as a request for further and better particulars. The defendant may not recognise dates, events, documents, or the statement may not have enough details about the amount owing, or accident. In other words, the statement does not have enough information for the defendant to adequately respond to it. If this happens, the defendant asks for particulars in writing from the plaintiff.
    • The defendant can always admit that he owes the money, and agree to pay it. If the defendant is intending to pay the amount in full, the defendant can then file paperwork with the court, termed a Notice of Payment. This form tells both the plaintiff and the court that the money has been paid, and all of the matters under consideration before the court will be ended.
  • The defendant can admit that he owes the money, and agree to pay it, but must make payments over time. To do this, the defendant files a form, called Acknowledgement of Liquidated Claim together with an application to make the payments in instalments.

With either of the previous two courses of action — paying in full, and paying by installment, — the defendant must realise that if he admits that the money is owed it will be extremely difficult to later get out of paying things such as interest, or potential additional costs, if the monies are not paid in a timely fashion.

  • The defendant can respond by stating he/she does not owe the money, or at least the full amount claimed, or is not at fault in an accident, depending on the matter. This is known as a Defence. In this document, the defendant denies (or does not admit) some or all of the assertions made by the plaintiff in his Statement of Claim. Defendants who wish to go this route should generally seek a solicitor to help them.
  • The defendant can also file a Cross Claim. With this paperwork, the defendant is not only denying that he owes the plaintiff money, or that he is at fault in the car crash, but the defendant argues that it is the plaintiff (or another party/parties for that matter) who is at fault or owes. Like a Defence, this paperwork makes the case more complex and generally leads the defendant to retain a lawyer.
  • Finally, the defendant could do nothing. If this occurs, the plaintiff is at liberty to prepare and file Default Judgment with the Court and the court will normally enter a judgment against the defendant for defaulting. The plaintiff can then take steps to collect the monies owed. Moreover, the default judgment may affect the defendantʼs credit rating. A copy of the default judgment paperwork will be provided to the defendant. At that point, the defendant can file paperwork to set aside this judgment; however, it is probably not advisable to rely upon this as a course of action if the defendant intends to otherwise respond.

Assuming that a defendant does not default or that the matter is not quickly settled, any paperwork that the defendant chooses to file must be in place within 28 days. At that point the court will manage the case using a predetermined set of procedures.

As noted above, the court is directed to use as little formality and technicality as possible, so long as the matter may be decided properly. Within six weeks of the defendant turning in any paperwork on his behalf, such as a Defence or Cross Claim, the case will be set for a Pre-Trial Review. The purpose of this session is to see if court personnel can help the plaintiff and defendant resolve matters without further court intervention. At this point, both plaintiff and defendant must be present, unless represented by a solicitor, in which case the solicitor can come to court on behalf of his client. If only the solicitor is present, the solicitor must have authority from their client — whether plaintiff or defendant — to settle the matter.

The court can also suggest mediation, and if the Pre-Trial Review or mediation does not solve things, the court will identify what issues and facts are in dispute for hearing. Here, documents and witness statements that will be presented at the Hearing will be noted. Finally, the court will decide if any of the witnesses should be present in court to orally state what they observed.

Once the court sets a Hearing date, care should be taken to ensure that the attendance of the plaintiff and defendant will be forthcoming. If a new date is desired, unless a sudden change of circumstances warrant, at least 21 days notice must be provided to the court to obtain a new day for Hearing.

At the Hearing, court personnel exercise a great deal of control over the proceedings. While the plaintiff and defendant may make comments, present arguments, or have their lawyer do so, the court will determine the order of evidence, what is looked at, and who besides the parties may speak. Furthermore, the court generally relies on all the written statements and/or evidence exchanged and filed by the parties.

If one party or witness who is required to testify orally cannot be available in person, but can use a telephone or audio-visual link, you can ask the court for permission to do so. Here, the rules get a bit more technical. Normally these types of situations occur when the matter is being conducted by a solicitor representing either plaintiff or defendant.

The matter will generally conclude by the court entering judgment for either side, stating specifically amounts owed and any other actions to be taken. If a party wins money damages, he or she must take further action to collect on his/her judgment. Either side may seek an appeal from an adverse decision, but the grounds to reverse or set aside a Small Claims Division result are quite limited.


The foregoing is intended as general, useful information for the public only. Please do not view these materials as specific legal advice for your situation. While certain proceedings in the Small Claims Division may be resolved by a person representing themselves, others seek to retain counsel for professional help with a claim or responding to the assertion of a claim.